Writing and working on the internet since 1993, I've launched 6 companies, of which 2 (internet.com and Earthweb) went public and two were sold (Net Quotient and MoveableMedia). My latest,
Keepskor, provides tools to ad agencies and markets, allowing them to develop mobile and connected TV games without writing a line of code.
More info can be found on TNL.net, my personal site. If you wish to contact me, you can find a number of ways to reach me by clicking here.

How Much Do Average Apps Make?

The last few years have seen an unprecedented number of people rushing to develop mobile apps for iOS and Android. But looking at the installed user base on each platform and information on the payouts made by the different companies, it appears that the vast majority of developers will find themselves with little revenue to show for.

The consensus around the industry is that Google dominates the mobile market with 900 million users, while Apple follows with 600 million iOS devices purchased, and Microsoft comes in third place with an estimated 12 million Windows Phones sold (the vast majority of those, 81%, being sold by NokiaNokia).

With different forums aimed at attracting developers, each company handles announcing the size of their markets differently.

Apple, at its WorldWide Developer Conference, talked about 1.25 million apps in the app store accounting for 50 billion downloads and $5 billion paid off to developers in the last year. To the company, it is a sign of pride to be able to pay this developer community. Internal data from the app store, gathered from sources close to the company, indicate that the numbers are in line with the actual payments made to developers.

At Google I/O, the largest Android developer conference, Google touted 150,000 developers responsible for over 800,000 apps. While the company does not break out revenue numbers on their apps, recent data in their financial filings seemed to indicate somewhere around $900 million in pay-outs to developers “over the last 12 months” and discussions with external research analysts put the number of downloaded apps from the Google Play store at around 48 billion, close to what Apple has claimed.

Microsoft, meanwhile, has been claiming 160,000 apps in their store from 45,000 developers. In a recent interview, Microsoft officials claimed that the average user downloaded 54 apps, which would put their download count at 650 million to date. While the company does not break out data for its mobile division, looking at the variations in the accounts payable line of their 10-Qs over the last few quarters before and after they introduced their app store shows a variation of up to $100 million since 2011 that could be attributed to the app store.

So taking all that data into account, we can summarize it as follows:

Looking at this, it is clear that Apple is winning the game in terms of total number of apps and money paid to developers. But lost in the shuffle is how much money developers can actually make on those platforms.

Meager dollars per download

Taking the data in front of us, we can get a sense of how many apps the average developer creates and what kind of revenue a developer can expect from those apps, on average (granted, power laws dictate that a small number of developers will do extremely well while the vast majority will fail, but we’re trying to look at averages here).

Based on this, the average developer on those platforms is pretty busy, developing 3 to 5 apps depending on the platform. Interestingly, Android is the big winner on downloads for a given app but this is largely offset by substantially lower revenue, with the average app download bringing in around 2 cents to its developer; Apple fairs 5 times better, bringing in a dime for every one of the 40,000 potential app downloads a developer could strive for. But the interesting thing is that Microsoft’s platform may be substantially more rewarding for its developers, bringing in $.15 per download (a fact that is offset by download numbers shown to be only 10 percent of what the other platforms can offer).

With the average paid app retailing for $.99, what we see here is the direct impact of free apps on those marketplaces. Android’s substantial lead in offering free apps cuts deeply into the average revenue paid out to developers while the smaller availability of free apps on the Windows platform may work to its advantage.

But what does that mean in terms of actually revenue?

Impact on developers’ wallets

Multiplying the average revenue per app by its average number of downloads, we can get a sense as to what an average developer can expect to make on an app today. Taking the same number and multiplying it by the number of apps an average developer creates, we get a sense of the revenues one can pull from going that way:

What we see here is that while decent amounts of money can be made on an app, a hard-working developer on iOS will be able to get a new car, while Android and Microsoft developers will be forced into the used car market if they plan to take those earnings on the road. At $4,000 in average revenue per app, Apple has a lead but it still begs the question as to how many developers can actually make a living directly from apps on any platform. Direct revenue from the apps themselves may not be able to justify large development teams but other revenue sources (advertising, for example) may help developers increase their take.

Of course, these are average values and many hope to find the next big hit, the one that will be on the higher end of the median. But for every app that goes north of those numbers, the average for the remaining apps drop.

Where are the opportunities?

There is, however, some hope. While Apple has developed a rich market for developers, Google and Microsoft both have opportunities to improve. For Google, the focus should be on improving the numbers by helping developers monetize their apps so they can come more in line with what Apple can offer. Even if they only reached half of what Apple does in terms of revenue per download, they would be able to match the revenue developers make. For Microsoft, the story is all about the number of users. If they were to manage their average revenue per app while growing their user base, they could potentially out-earn all the other platforms.

In all three cases, however, there is much work to be done to increase monetization of free apps. And that may be the next growth opportunity for any developer as it presents an opportunity that is substantially larger than the existing one.

Every app developer hopes to build the next big hit but, as is the case for any hit-driven market, a large group will be left behind with little to show for their efforts. At the end of the day, the model for mobile apps is no different than any other of the past: whether it is gold in the Yukon, websites in the 1990s, or app developers today, larger amounts of revenue will go to those who enable development than to those who are doing the development. Levi Strauss made his fortune selling picks and shovels to gold prospectors; Adobe, Amazon, and Google made theirs enabling web developers; and as the mobile revolution takes hold, some new players will emerge providing tools to create apps and those may be the biggest winners.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

What isn’t represented in these numbers are the apps that support online services, like banks, travel services, or companies that sell software as a service. Free phone and tablet apps interact with online software services, like the appointment scheduling app sold by my former company and used by hundreds of companies large and small to allow their customers to schedule appointments online. The web-hosted appointment scheduling software can sell for hundreds of thousands of dollars, with the phone and tablet interfaces making the web-based service more attractive and more accessible. That’s the frontier where the ecosystem battle may be won or lost and it simply doesn’t show up in the $ amounts representing direct sales of apps. In other words, there are a lot of people out there being paid excellent salaries to develop apps that will never be ‘paid apps.’

Tristan, Not every app is the same in desireability nor will all apps get the same number of downloads. The REALLY popular apps will make a lot of money for the developer. The ones no one uses may make next to nothing. But all have the same chance to reach the public.

All apps are not created equal in terms of utility or popularity. Invent a great app and you’ll make a LOT of money. Invent a dud and you won’t – it’s that simple. But Apple does have more apps offered that make a LOT more money for its developers.

That’s exactly why I talk about power laws. For every app that goes ABOVE that average, the average drops down for all the remaining apps. So this is the average for ALL apps and a few will go above that.

The most popular app is making insane profits for Google and Apple – The developers are not getting their fair share. The popular apps are what sell the device to people and in return the device makers screw the developers by paying out jack squat. Also Apple has a much stricter app approval process. They reject more then half of all apps submitted. Only letting through the ones that they feel will be popular. Google allows most apps through thus lowering their average quality and sales/download margins.

Tristan, you cannot use averages here. They are completely unrealistic. The mobile app market is no different than any other software market. A small handful of developers will take the lion’s share of revenues, and the overwhelming majority of the remainder will lose money. A smaller percentage will be lucky enough to break even. The old adage in the video game industry was that the top 10 games take 90 percent of the revenues. This is no different. Any developer who isn’t one of the tiny fraction to have a hit product isn’t going to get enough to buy a car of any type, new or used. They’re going to lose money.

$0.1 revenue per download for Apple – That equals a bunch of money for Apple and squat shit for developers. That is after jumping through Apple hoops and paying for the right to be a App developer on IOS.

Actually, Apple has paid out $10 Billion according to the WWDC presentation about a couple minutes into the Keynote. So he has to COMPLETELY redo his numbers and conclusions. Basically, the article is based on half as much money paid out to the developers than reality, so don’t even take this article seriously until Tristan has redone it. Oh well. I guess their fact checker wasn’t working.

They did indeed pay out 10 billion overall (including 5 billion in the last year). The numbers here are for the last year. It’s impossible to compare the overall numbers as Apple, Android, and Microsoft all started at different times. So instead, I focused on the last 12 months in revenue. I will make that clearer.

It’s an oversupplied market like all software is. Nobody wants extra junk. More than half the apps I try don’t work. As a result I only do the free ones. If they cost money then I don’t bother because they’re just going to cost money to find they don’t work.

Brenda, true nobody wants extra junk and yes the market is oversupplied just like any other market, but is it not worth paying for something that’s going to be really useful, then just coasting on freebees?

I think you just identified why half of the apps you try don’t work… you get what you pay for. In my experience, the majority of paid apps that are updated regularly are really great; it’s typically just the paid apps that developers ignore after launch that break because they aren’t updated to work with new devices and operating systems.

You see the problem? I hope so. The solution at the moment for developers is to give you a crippled App and ask you to pay a lot via In-App-Purchases. But the overall quality of Apps will not rise unless people like you start spending money on normal upfront paid Apps again.

Do you know why so many crappy free apps are out there? They are largely made by first-time developers who are just trying to get the hang of things late. The rest are riddled with ads that push you to either pay for an ad-free version or get a paid app from a competitor (where they get a cut.)

I, for one, loathe in-app advertisements. So I will put my money where my mouth is. If I try the app, and I find it useful, I will buy the ad-free version. I will also try out “trial-apps” from the developers who charge for the full versions. This ensures that I get a quality app, and also supports the dev community who builds them.

If one refuses to pay for anything, then one can only expect to get cheap things in return. Sorry, but the world moves on money. I seriously doubt that you would spend a few months developing a great app, and then send it out there expecting nothing in return for your time. I also doubt that you go to work for free… Hypocrite.

pretty interesting info. i would like to add that there has been a dramatic change in the quality and price of top apps recently. not long ago people were hesitant to pay even a buck for a decent app. now, 11 of the top 25 paid apps on the apple app store are MORE than a dollar (some quite a bit more). this trend is likely to continue. this will net the developers more $ / download. also, sales of smart devices are growing rapidly. apple alone sold well over 50 million app-devices just in the last 3 months! the combination of higher priced apps and more app-devices will likely yield better results overall for developers. p.s. – clearly “free” apps do not mean no revenue for developers. although somewhat annoying to me… the highest grossing apps are often ones that offer in-app purchases.